FSDO will carry out research into the digitalization of tax administration processes in response to a request by the Iranian National Tax Administration (INTA) (letter from INTA to FSDO is attached in this demand repository). Iran is interested to see how other countries have gone about the process of digitalizing revenue administration processes with a view to learning from the experiences and best practices towards establishing a ‘smart tax system’.

Digitalization of processes can be one of the most effective mechanisms to enhance revenue collection and enforcement, as it will improve efficiency and effectiveness of tax collection. These processes can play an important role in reducing risk and building resilience by strengthening developing countries tax enforcement and collection mechanisms to enhance revenue generation and administration, thereby supporting these countries’ domestic resource mobilization efforts for the achievement of the SDGs.

FSDO has considered the request by INTA and finds that the research will be useful not only for Iran but for other developing countries in the midst of or considering digitalizing their tax administration processes. Moreover, the work will be beneficial for the UN Tax Committee’s small group on digitalization of tax processes, which is anticipated to inform future UN capacity development work in this area.

Accordingly, the research would cover the following aspects from the digitalization of tax administrations perspective: (i) the definition of/criteria for determining a smart tax system; (ii) the role and position of different departments/units (such as information technology) within the tax administration in the process of digitalization; (iii) the role of other government departments in the digitalization process; and (iv) examples of countries that have successfully implemented smart tax systems.

In the Outcome document of the 2022 Financing for Development (FfD) Forum, Member States recommitted to strengthening the capacities of revenue administration through modernized, transparent and progressive tax systems, improved tax policy and more efficient tax collection (E/FFDF/2022/L.1, p. 4.). To this end, Member States called upon the international community to scale up support for capacity-building to developing countries, especially in building their tax policy and administration capacities. In resolution 68/204 of 20 December 2013 (A/RES/68/204), the General Assembly recalled the commitment of Member States to enhance and strengthen domestic resource mobilization and fiscal space, including through modernized tax systems and the broadening of tax base. The same resolution reiterated the importance of supporting national efforts in these areas by strengthening technical assistance and enhancing international cooperation and participation in addressing international tax matters.